The Ramsey Show Highlights "You're Not Doing Math Well"
Sep 29, 2025
Dive into the who, why, and how of tackling debt! A caller grapples with $35,020 owed to creditors and the IRS, prompting experts to dismantle the math behind borrowing from a 401(k). With a strong income of $205,000, the focus shifts to budgeting rather than dipping into retirement funds. Listeners learn a straightforward plan to eliminate debt in 8-12 months. Discover the importance of prioritizing expenses, cutting up credit cards, and why living on a budget is the key to financial freedom!
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Payroll Glitch Created IRS Debt
- The caller and his wife were FPU graduates who hit a rough patch and even separated, which led to tax withholding errors.
- A payroll glitch kept his status as single, resulting in $13,323 owed to the federal government.
Don't Borrow Your Way Out
- Stop borrowing from your 401(k) to pay current debts and avoid effective high interest and penalties.
- Create a written budget, cut investments temporarily, and throw every extra dollar at the debt until it’s gone.
Minor Costs Aren't The Core Problem
- Small recurring costs (like $200/month life insurance) are negligible on a $205k income and not the main issue.
- The real problem is lack of a shared plan and discipline, not minor expenses.